Whether you’re managing an established small business or preparing to launch your first startup, you shouldn’t have to do it all by yourself. It’s not just about having some help to better manage your workload when it becomes too much, but also about tackling tasks that are beyond your skill set.
But should you hire freelancers, or would permanent employees be a better choice? Let’s explore the pros and cons.
Why hire a freelancer?
They specialise in one area
Freelancers typically specialise in one thing, and that is what you hire them for. Copywriters write copy. Mobile app developers build mobile apps. The benefit is that they’re very good at what they do.
Many have a great deal of experience with lots of different businesses. Each project they work on and each client they collaborate with adds more knowledge and expertise to their arsenal. And you’ll get the benefit of all that on your projects too.
Now, if you’re open to working with people who don’t live in the same city or country as you, you’ll discover there’s a huge pool of talented freelancers out there that can help with anything you need.
They’ll save you money
Freelancers cost less than hiring a permanent employee. That’s not necessarily because they charge a low hourly rate, but because they’re much more cost efficient. Even at a high hourly rate, you can save money with a freelancer because:
1. You only pay for the work they do, which means none of the money is wasted on downtime.
2. You don’t have to pay for things like taxes association with the PAYE system and statutory holidays, or additional costs like office space or supplies.
Short term commitment
One big plus to hiring a freelancer is the ability to bring in an expert on a project basis. You may just need someone with a specific skillset now, and someone with a different skillset later on. So why hire someone permanent if all you need is a quick turnaround or a task that requires a specific expertise for a short period of time?
The beauty of working with freelancers is that they can provide flexibility in terms of hiring as well as firing.
• You can hire a variety of freelancers on a per-project basis rather than committing to them long-term. This allows you to mix and match talent as your projects and business needs change.
• You can also fire a freelancer when the project has ended or whenever they don’t meet your needs. Unlike the process of firing a permanent employee, ending a contract with a freelancer is usually quick and hassle-free.
But freelancers aren’t perfect. Following are a few of the downsides so you can make a balanced decision about whether this option is right for you.
They can disappear
Things go great in the beginning. Work gets turned in on time and the quality is high. Then something happens. Deadlines are missed, work quality drops, and then your freelancer stops answering your emails and just disappears.
Unlike permanent employees who (in most cases) come into the office every day, freelancers can be slow to respond to emails, or can simply disappear. It’s not unheard of for them to leave mid-project for whatever reason. While that rarely occurs, you need to be prepared with a plan B if that happens.
They also need training
Employees aren’t the only ones you have to train. Freelancers may need it too, depending on the project. So when deciding whether to hire a freelancer or an in-house employee, consider the amount of time that you’ll need to invest in training. If there’s a long lead time for them to get up and running, it might make better sense to use that investment on a permanent employee.
They might exaggerate their skills
Some freelancers are so hungry for projects that they exaggerate their experience and skills. So before you hire any freelancer, make sure you check online for samples of their previous work and testimonials. Talk to at least one of their former clients to ensure you’re getting your money’s worth. Also, avoid working with anyone who can’t be found online.
Why hire a permanent employee?
They have a vested interest in your business success
People who work with you permanently have bought into your idea or project, and are investing time and energy into making it successful. They chose to work with you long-term so they have a vested interest in the outcome. They know your success is their success as well, which also makes them more likely to be long-term players.
They can solve problems faster
If you have a problem that needs to be fixed quickly, employees can direct all attention to it immediately, unlike a freelancer who may have prior commitments. Also, since they’re part of the team and know what’s going on, they can fix the issue fast without having to schedule a meeting time to discuss it or to receive further instructions.
Not to say that freelancers aren’t. However, what do you do when your workload becomes too much and your favourite freelancer is fully booked or gives you a much higher estimate for urgent work?
With employees, you can rest assured that if your workload increases and you need urgent help, you’re covered. The same can be said if you want to take a vacation. You’ll have someone holding down the fort for you in your absence.
Having permanent employees is great but they come at a cost. Here are some of the disadvantages of hiring them.
They can be expensive
When you hire a permanent employee, there are lots of costs to consider. Aside from their monthly salary, you’ll also have to get to grips with the tax you’ll have to pay under the PAYE system, as well as the associated admin. You can get an overview of how PAYE works here. If you’re trying to hire in a competitive market, you may find that you need to offer other perks and benefits on top of a good starting salary to attract the calibre of employee you’re looking for.
Then there are also the overhead costs that contribute to a business’s day-to-day operations like computers, office equipment etc. These costs add up and can get quite high. Building a team of permanent employees that work remotely is a possible alternative, although doing so comes with its own costs and complications.
Talent can be difficult to find
If your business is located in a smaller city, most of the top talent may already be employed, which means your chances of finding quality talent are slim.
But even if your business is in a big city, the whole process of finding, interviewing, negotiating and training can take up a lot of your time, leaving you with even less time to deal with other pressing issues with your business. You may also find yourself competing with big companies, meaning you may need to offer higher wages to attract the right person.
They need to be paid even when times are slow
One of the most difficult things about running a business is keeping on permanent employees when times are slow. As a business owner you’ll have to choose between carrying the financial weight of employees during the slow times so they’re available in the good times, or reducing the hours they work, or letting them go and then going through the time-consuming hiring process again when business picks up.
And of course, you can’t simply fire people if you no longer need them. If you plan to make staff redundant, you need to follow the rules or you could end up in court. You can find out more about redundancy rules here. This isn’t something you need to worry about when you’re working with freelancers because if you don’t have work, they’ll just find it somewhere else.
They have employment rights
We’ve touched on this in other section above, but if you’re hiring a permanent member of staff, then they have basic employment rights which you will need to meet.
Trying to cut costs by failing to respect an employee’s rights can, and often does, backfire.
Being ignorant of employment rights is no excuse either. You can get an overview of these rights here, but you may want to speak to a business advisor before making your first hire.
Freelancers are not entitled to these rights, but don’t try and blur the line between freelancer and employee – as Uber (and others) have found out, this can also prove costly.
So, should you hire a freelancer or a permanent employee?
If you’re still unsure, here are some questions to ask yourself before making your decision:
1. What type of work do I need help with? If you need a specific skill for one-off tasks or short projects, then hiring a freelancer may be the way to go. But if there’s a significant learning curve, then a permanent employee may be a better fit.
2. Do you need help short-term or long-term? If you have a big project or a busy season where you need temporary additional assistance, a freelancer is a no-obligation way to help you to successfully get through those busy times. But if you expect to need help for the foreseeable future, then a permanent employee may be a more practical choice.
3. What’s your budget? If you’re on a limited budget, hiring a freelancer should cost you less than a permanent employee. But if you believe that a permanent employee is what you need, make sure you can afford all the costs that come with hiring one.
In conclusion, there are pros and cons to hiring both freelancers and permanent employees. It all depends on your business needs. Hopefully the information in this article will bring you one step closer to making the choice that’s right for your business. But remember, taking on your first permanent employee is a big step and we highly recommend you seek out expert advice before you do so.